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Wine industry optimistic despite economy, low supply, study finds

September 21, 2011 | 10:46
am

Not much, including a sluggish economy, bad weather and low supply, can keep wine aficionados from a good glass, according to new reports from UC Davis.

Economic doldrums have stymied consumer confidence. Cool temperatures hampered the grape crop. Wine production is likely facing several more rough years, said Dean Robert Smiley of the university’s Graduate School of Management.

"Even though we have technically been out of the recession for two years, growers have been reluctant to expand their plantings or replace older vineyards that are moving into declining production," he said in a statement.

But in the strongest show of confidence since 2007, 71% of wine professionals say they expect the industry to improve anyway.

Retailers are leaning heavily on discounted high-quality bottles to draw buyers. Producers are working with third-party wine clubs to broaden their customer bases.

The industry will also tackle heady issues over the next decade, including the consolidation of distributors, environmental issues such as climate change and ramped-up government regulations.

With high demand expected among young drinkers and foreign customers, especially in China, 53% of wine industry executives say this year will be more profitable than last. Nearly three-quarters anticipate that 2012 will also outpace 2010.